A holiday company offers a range of package holidays abroad. The management are examining the viability ofthree types of holiday for the coming season.
An analysis of costs and revenues of each of the holiday packages is shown below:

Past experience has shown that the average number of places taken up on the holidays, as a percentage of the maximum number of customers, will be 70% on sports, 80% on culture and 60%
on special interest holidays.
The costs of the local couriers will not change irrespective of the number of customers. The costs of air travel are also fixed and are based on a block booking of seats for the season. The booking with the airline has already been confirmed. Contracts for the couriers have not yet been signed.
All accommodation costs are variable with the number of passengers. The commission is proportional to the price of the holiday.
The other customer costs and office overheads, in the table above, are allocated over all the company’s different package holidays. They are semi-variable costs and an analysis ofthese costs for the last three years relating to all holidays is as follows:

The effects of exchange rates and inflation may be ignored.
Required:

(a) Analyse the costs and revenues into a form more suitable to an assessment ofthe short-term viability of each holiday. Calculate one possible break-even number of customers required for each holiday.
N.B. Your analysis should be presented showing, where appropriate, costs and revenues per customer. (10 marks)

(b) Identify clearly the shortcomings of the original analysis, explain your preferred analysis and interpret the results.

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Special Sports Culture Holiday Holiday Interest Holiday Maximum Number of Customers 100 100 100 Total Revenue (100 customers) 42:000 48.000 30.000 Costs: (100 customers) Air Traver 8.100 8,400 1.800 Hotel and Meals 16.800 19,800 1,200 Local Courier 1,500 1,500 1,750 Other customer costs and office overheads 10,560 11,880 6180 Commission 6.300 4,800 6,000 43.260 46.380 28.930 Profit/(Loss) E (1.260) 1.620 1.070